Ormonde mine gets 'significant upgrade'

IRISH EXPLORATION group Ormonde Mining announced a “significant resource upgrade” for its flagship tungsten project in western Spain yesterday.

The company, which is listed on junior markets in Dublin and London, said a feasibility study on its Barruecopardo tungsten mine in Salamanca had indicated a 60 per cent increase in projected production. This would allow for an expanded production rate of 1.1 million tonnes of ore per year and had resulted in a substantial upwards revision in its annual cash flow forecasts, the company said.

At €3.50 a-tonne, the averaged annual pretax operating cash flows would be in the region of €30 million.

First production at the Ormonde mine has been slated for the second quarter of 2013, slightly later than previously planned, with capital costs identified at €40 million, including a 20 per cent contingency.

The project is expected to produce up to 8 per cent of tungsten supplies outside China. The global price of tungsten, which is used in a number of industrial production processes, has soared by as much as 80 per cent over the last year due to the scarcity of supply.

In a note yesterday, broker Davy said the announcement showed steady and positive progress towards the next tungsten mine in Europe. With current pricing in the order of $450 per metric tonne unit and a cost per of just over €100 per metric tonne, the project had “substantial downside protection”, it said.

Ormonde managing director Kerr Anderson said the company was now moving forward with a project which would produce substantially more tungsten than previously envisaged.

“Barruecopardo remains a large-scale, low-capital and low operating cost mine, providing a secure source of this strategic metal, generating significant annual net operating cash flows, and delivering sustainable benefits to the local community,” he said.

In its annual figures for last year, published in May, Ormonde said it had narrowed its losses in 2010, reporting a deficit of €1.08 million for the year. This compares with a loss of €1.6 a year earlier.